Looking grim: The cost of plenty

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India's batsmen and bowlers may have had mixed luck on the field, but as 2011 winds to a close the outlook is looking grim for Cricket Inc. This isn't because corporate sponsors have lost faith in the game's ability to notch up TRPs and captivate the masses;far from it. What is worrying is a growing perception among broadcast houses, media buyers and those who invest heavily in the game that dealing with the Board of Control for Cricket in India isn't likely to be a very profitable exercise. In fact, unless you have very deep pockets, it could even turn out to be disastrous.

The tipping point has been the termination of the BCCI's broadcast deal with Nimbus, a decision likely to have farreaching consequences for the cricket broadcast industry in India. Market analysts are now speculating whether the reasons behind the failed broadcast deal - and a large number of attendant factors including packed scheduling of games - will lead to a market correction of the worth of cricket broadcast rights in future, and whether it will have a ripple effect on advertising rates. With the economy staring at a likely slowdown, analysts feel the BCCI may even be in for further monetary setbacks of the kind witnessed during the Nimbus fracas. As one senior broadcast house veteran put it, "Overkill and over-pricing has led to India's most financially viable sport staring at a recession of its own making. Fatigued advertisers and sponsors have only a certain budget earmarked for cricket and so are reluctant to spend big during meaningless bilateral series. The urban fan too is looking the other way. There has been maximum monetisation of the property and there is no way to go but down. " The prevalent sentiment among the game's stakeholders is that apart from properties being overvauled, there are attendant factors - harebrained scheduling, meaningless bilateral ODIs, contests devoid of context, the lack of settled star lineups in the Indian team and pathetic spectator comfort at stadiums - which have had a role to play in heralding cricket's era of diminishing returns.

"Maximising a property to this extent is nothing but cheating the consumer. The causes are interlinked and complicated, but cricket may have to take more pragmatic calls in future. It must scale down in terms of both financial expectations and playing calendar, " said another broadcast executive, adding, "It's no accident the world's richest cricket board is without a host broadcaster. It's also significant that a brand like Airtel moved out of T20 cricket (the Champions League) into Formula One sponsorship. The signs are clear. "

The math seems to bear this out. In 2009-10, Nimbus renewed its contract with BCCI for Rs 2, 000 crore, with an agreement covering the telecast of 64 international matches and 312 days of domestic cricket till 2014, which works out to Rs 31. 5 crore per international fixture. As per industry estimates, there is an average of 5, 000 seconds advertising time available during the telecast of a One-day match. If Nimbus was dependent on ad revenue alone, divided into the customary 10-second slots, this would mean the broadcaster would have to command about Rs 6 lakh from advertisers for a slot. This is not feasible, say sources in leading broadcast houses.

An average bilateral series with decent but unspectacular TRPs can command Rs 2. 5-3. 5 lakh per slot. Of course, broadcasters look to make up with marquee series. During the India-Pakistan World Cup semifinal earlier this year, ad rates for these 10-second slots ballooned upwards of Rs 20 lakh.

This is why Nimbus was so desperate for the India-Pakistan series to take place in March-April 2012, and why it demanded a review of its deal if the series was scrapped. As it stands, with the political machinery in both countries adding to the uncertainty, the Asian Cricket Council decided to slot the Asia Cup instead during that period: a huge setback for Nimbus.

The sentiment in the broadcast industry is that Nimbus deserves accolades for having survived for so long. "Fringe players have it bad here, " said a top executive privy to the hush-hush dealings between broadcasts and cricket administrators. "Though Nimbus was the highest bidder, the BCCI made a mistake by giving them the rights as they have no pedigree in this business. Being a single-contract company, it is next to impossible to recoup your expenses. Plus, Nimbus' revenues from cable sales (and DTH in urban centres) were minimal in Grade B and Grade C towns, making them too dependent on ad sales. "

There are other factors too which set Nimbus back. A senior analyst familiar with the dealings said that when Nimbus' Harish Thawani first put in a $612-million bid for the rights in 2006, there was no Indian Premier League and no 'must-share clause' with state broadcasters Doordarshan when it came to One-day matches. Nimbus would have expected, given inflation and that it commanded all bilateral internationals and domestic cricket in its entirety, to make the revenue model work.

The BCCI billed IPL as a separate property and the extra cricket, with all its star-power, led to diminished eyeballs in routine home series, which were getting dull anyway. Nimbus would later get a discount for the clean feed sharing with DD. Transfixed by the prospect of increasing returns from an ever-expanding calendar, the BCCI, it seems, may have overplayed its hand. Having renewed their contract, Nimbus found they had promised way too much, and sources say there were plans for an initial public offering to enable them to branch out into the general entertainment sector when it defaulted on payments. With the need to cut costs and squeeze in every inch of available space for advertising, the battle for survival affected broadcast quality.

Viewer fatigue too is one important factor, and the trend of empty seats at major venues during the 'revenge series' against England should make for furrowed brows even among IPL franchises. According to figures made available by ratings firm TAM Media Research, the average TVR (TV rating) for IPL-4 fell to 3. 91 from 5. 51 in IPL-3. The figures are still good, but the reason, clearly, was viewer fatigue in the wake of the World Cup this year, a tournament which India won and an emotional nation keenly followed. India played in the West Indies immediately after, but the big ticket England tour, on which India lost every game, had an average TVR of only 1. 79.

The broadcasters would still have made their money because ad-spots had been pre-sold, but the profits wouldn't have been in the range anticipated from an event of this magnitude. "With ad rates for 10-second slots so high, advertisers are choosing carefully which tournaments to invest in. This is affecting the broadcaster's revenue stream too. The entire business model of cricket is centred around TV rights revenue, which filters down to all parties. If the broadcaster is not making money, the whole structure can collapse because the price of TV rights will come down. "

The industry, it seems, is divided on where this is all headed. Some feel the BCCI needs to shrug off the image of negativity around it and usher in "good business practices". Others feel cricket will gradually start to share ad spend with general entertainment programmes, and not just other sport. In spite of Airtel's move to Formula One, ad spend on cricket is unlikely to veer away into other sports in future. TAM ratings seems to bear this out, with cricket's reach in millions growing exponentially from a figure of 122 in 2008 to 195 in 2011. Football enjoyed a reach of 155 million during the FIFA World Cup year, but this fell to 121 million in 2011, figures which advertisers keep a close watch on. "Nothing else sells but cricket" is still the adage, it would seem.

What is clear, though, is that broadcasters don't want too much cricket - or 'non-context' series - though they aren't coming out and saying it on record yet. With the BCCI on the lookout for a new host broadcaster, everyone is keeping fingers crossed ahead of what is expected to be an intensely competitive bid. But both the BCCI and the contenders need to learn to leverage things better. "Instead of a system which benefits only the BCCI, it needs to be a winwin situation for all, " said one media planner, "Or you need very, very deep pockets to ride out the bad times. A correction in rates, or a tweaking of schedule, may be inevitable in future because the big houses are unlikely to bid as high as Nimbus did. "

Indian cricket, we all thought, was self-sustaining, like the 'Water of India' magic trick, with an audience of billions which would never look the other way. It's clear now that far too many things had been taken for granted.